Graham Swings Wildly

Graham really is concerned about having to be more open with the citizens of Pennsylvania. Here are his remarks to the State Senate on Dominic Pileggi's (R-Delaware County) Right-To-Know legislation along with my comments in the fashion of SOS.

Good morning, Chairman Piccola and members of the State Government Committee. Thank you for this opportunity to comment on Senate Bill 1, which seeks to amend the State's Right-to-Know law in ways that will have a profound negative impact [Tell us how you really feel.] on Pennsylvania's state-related research universities.



First, perhaps you are not aware, but Penn State already opens its financial books to you and the public. The online version alone represents 5,000 pages of [largely uninformative] budget detail. In fact, every year, as required by The Higher Education Fiscal Information Disclosure Act, we deliver detailed reports on our finances to the General Assembly and post the same information on our Web site. These reports (described in detail in an addendum) answer nearly every conceivable question about how we spend taxpayers' funds except for the individual salaries of our employees.[Here is an exercise for the readers. Follow the links to the budget and try to find out how much the University spent to hold a Trustees meeting in New York City in November of 2004. Also see if you can find out who or what organization donated money to help defray the cost. This is relevant since it could have been someone or entity (RIAA?) with business before the University. I won't sit arround and wait to see what you find.] Let me make myself perfectly clear -- this proposal goes far beyond making Penn State accountable for how it spends public funds. Nobody would argue the point that the public has a right to know how public funds are spent [...,but I will.] But this bill will fundamentally change the way we operate, the way our trustees govern, and the way I administer their policies.[In the same way that the successful lawsuit opening up PHEAA's finances has changed the way they do business.] Frankly, we will have to operate in a way that will make us less nimble and less competitive with the other major research universities in the nation. [When administrators start talking about nimbleness and competitiveness what they really mean is that they are worried that they will have to justify the unjustifiable]



The fiscal information disclosure requirements in our annual appropriations bill currently provide the right balance of access to information and public accountability without adding crippling new costs, which would diminish the excellence of the University and make it less competitive nationally. It remains the most appropriate mechanism to guarantee higher education accountability and public access to information.[Don't you think his language is a bit over wrought. One might think that he has something to hide.]



Adding state-related universities to the Right-to-Know law would have serious unintended consequences not in the best interests of the Commonwealth . I worry about the creation of a new and expensive bureaucracy to control and process requests for information (and perhaps extensive and expensive litigation over the law's meaning and effect).

Examples of unintended negative consequences of applying Right-to-Know provisions to state-related universities are:

• By opening all files to the public, including vendors, the University would suffer a substantial loss of competitive leverage in negotiating contracts for the purchase of goods and services, leading to increased financial and operational costs.[The word on the street is that vendors that get contracts with the University have it made in the shade, because Penn State buys only the best. I don't know if that is true, but opening things up would reveal if it were.]
• Revenues from the lease and sale of intellectual property would likely fall, since if the terms of such agreements became public, prospective corporate partners would be reluctant to pay any more than the lowest-paying partner.[Could the lowest paying partner have some sort of inappropriate sweetheart deal with the University? Opening things up would answer that question.]
• Senate Bill 1 could block the University's opportunity to invest its endowment in various attractive funds, which will not permit their specific investment strategies and holdings to be publicly disclosed. We have already been so notified by some of our investment funds.[This is a good one. In fact, the US Senate is a bit concerned about universities which enjoy tax-exempt status investing in some questionable funds.Graham may be testifying before the US Senate very soon.]
• Senate Bill 1 will severely limit the University's opportunity to enter into contracts with outside entities that do not permit the terms of their agreements to become public due to competitive concerns (examples include our lucrative partnerships with Nike, Highmark, Pepsi, Barnes and Noble, and others).[Graham you can't be serious, can you? Your relationship with corporate America is more important to you than your relationship with the citizens of Pennsylvania who, by the way, provide you with far more money than these contract do. What about questionable aspects of these deals?]
• Each year Penn State spins out companies and licenses technology. The details of the deals surrounding licensing fees, royalty structure and equity stake vary with each technology. If the details of these deals were publicly available, the ability to negotiate the best terms would be compromised. Senate Bill 1 would make Pennsylvania's public research universities, and as a result the Commonwealth, less attractive for such partnerships. This would hurt Pennsylvania's economic development goals. [Universities are supposed serve the public good. In fact, the justification for these corporate deals is that they provide the holy grail of jobs. Are the costs of such deals higher than their benefits to the Commonwealth? Do the benefits trickle down? I think the citizens have a right to know.]
• Penn State ranks second in the nation in grants and contracts from Industry ... about $100 million per year. It is well recognized that contracts with industry can be challenging. Making details of contracts publicly available will threaten our competitive position with universities outside of Pennsylvania, as well as with private universities within PA with whom we compete.[See my last comment.]
• Senate Bill 1 could compromise donor confidentiality. The following information and activities are presently confidential. Exposing these elements and other information of similar content to the public eye would have a chilling effect on donors and would negatively impact our private fundraising productivity: individual donor gift histories; donor gift agreements; the payment vehicles donors use to satisfy their pledges; the assets donors use to satisfy their pledges (i.e. securities, real estate, artwork, etc.); donor research profiles and wealth estimates; donor contact reports, including confidential meetings with a donor's personal legal or financial adviser; expenses associated with donor identification, cultivation, solicitation and stewardship; and minutes of staff and volunteer meetings involving donor strategies.[This is a legitimate concern. I am not certain about Pileggi's legislation, but Mahoney's (D-Fayette County) House bill allows for donor confidentiality while making provisions to avoid conflicts of interest.]
• Senate Bill 1 will create a further erosion in privacy rights of individuals whose personal/confidential information is part of documents falling within the scope of Right-to-Know Act requests.[Again I am not very familiar with Pileggi's bill, but the Mahoney bill address this.]
• Senate Bill 1 could hinder incentive and merit pay programs for faculty. It could allow competing universities to raid the Commonwealth's research institutions.[Translation:we won't be able to underpay certain faculty while overpaying others.]
• Senate Bill 1 will chill certain economic development activities if proprietary/confidential business information is subject to disclosure under the Act.[Back to the business crap again. Who owns this guy? The large number of references to business alone should send up a warning flare that Penn State must be made to open up its books.]
• Senate Bill 1 would require various departments and student organizations to invest enormous resources in researching and copying all kinds of detailed information requested by advocacy groups and protesters intending to deliberately interfere with and halt normal operation of the University. Unreasonable and repetitive requests could paralyze our operation.[Graham put it on the web and let people get it as they need it. It's our information not yours.]
• Making individual salary information public would increase administrative costs, pose a constant detriment to employee morale, severely inhibit the use of merit as a basis for the salary structure and reward system, limit management flexibility, and make the University more vulnerable to increased competition and raiding from other institutions for quality faculty members.[He really is focused on the whole pay thing. This is his second bullet point which discusses it. Maybe he doesn't want anyone to find out his complete compensation package.
  Again, how in the hell does opening up salaries "inhibit the use of merit as a basis for the salary structure"? If the salaries can be justified on the basis of merit making them public shouldn't cause any trouble. On the other hand, if salaries are based on cronyism, then all hell is going to break out. Is that what you are afraid of? The constant detriment stuff is way over blown. I'll admit that initially the morale of some employees will suffer, but in the long run pay will come more into line with performance and moral will rebound. ]
• Speaking of Penn State's competitors, why this bill omits state-aided universities is baffling. It is as if you are determined to put the state-related universities at a competitive disadvantage and reduce us to a lesser and minimally competitive status. Like the University of Pennsylvania, Penn State and Pitt are members of the highly selective Association of American Universities, and are major national research universities. In the latest published National Science Foundation's rankings of research expenditures Penn State ranked ninth in the nation -- Penn was 10th. We compete with Penn, CMU, Cornell and other major national research universities for faculty, public and private research dollars, students and so on.[Graham how does this bill place Penn State at a disadvantage? I can assure you that most people offered faculty positions at Penn State and one of those other schools will take the other school's offer. Penn State despite all the money it gets to do research is, for the most part, an intellectual backwater.And Graham if you weren't so busy kissing corporate ass you may have been able to do something about this. I am starting to think that you're just throwing shit at the wall to what sticks. For example, how does this bill hinder Penn State in the competition for public research money? ]Yet while Penn, Drexel and 24 other institutions collectively receive well over $100 million in nonpreferred appropriations from the General Assembly, they are not included in this bill. Why? [Graham here's a guess. I can divide and that comes out to $3.85 million per school. Penn State in FY 2006-2007 received $328 million from the state which is  a little more than 85 times the average amount those 26 schools received. I'd say that has something to do with it. And Graham ,Mahoney's bill does cover state-aided schools.] I am guessing that someone must have correctly determined that it would put them in a competitive disadvantage, or that their receipt of public funds was a sufficiently small portion of their budget to not make them "public" for purposes of open records. Like these other institutions left out of SB1, Penn State receives a very small portion of its budget from the state -- less than 10 percent -- yet this bill would open up the entire University to open records, regardless of its impact on our ability to compete.[Graham your guess is just way off the mark, and, as is typical for you, rather self-serving. It is certainly about the absolute number. I am sure you realize that for FY 2006-2007 state-related universities received more in state funds than did the state-owned universities and the state-own schools are covered by the current Right-To-Know law. I haven't heard them bellyaching about it. In fact, Penn State alone received nearly as much money as did the state-owned universities.The state budget is here.]

This bill does far more than feed the prurient interests of newspaper editors who are looking for a headline about how much Coach Paterno makes -- as if one could put a dollar value to what he deserves to make based on his contributions to this state since he arrived in Pennsylvania nearly 58 years ago. [The last refuge of a scoundrel:blame the press.]I would point out that no tax dollars support his salary.[I would like to point out that the current lawsuit, now before the state supreme court, to have his salary publicized concerns not the funding source of his salary, but the funding source of his pension. That would come out of the University's operating budget which is supported with state funds. Further the pension is guarrentee by the state. Graham, you don't real reflect well on Penn State when you engage in such sophistry.] As you know, our Board of Trustees has a long-standing policy regarding the privacy of individual salaries. What we are concerned about is the impact that opening up University salaries would have on Penn State's ability to compete in a global marketplace for the best faculty and research scientists[Here's the deal, you rarely hire the best as it is. It's not about the pay. It's about the anti-intellectual climate which you foster.] who we ask to come to Penn State to teach and do critical research that supports the state's economy and quality of life.[Here is an example of that anti-intellectualism. You failed to mention pushing back the frontiers of knowledge which is the primary purpose of university research. For you it's all about helping out your corporate buddies in the name of economic development,i.e. trickle down.] That's what's at stake -- Penn State's ability to teach, do research and serve the Commonwealth and its citizens -- and that's why I wanted to personally attest to the impact of this bill before you.[[Oh my gaud! Open Penn State's budget and we'll all die!]

There are two things that stand out in Graham's testimony. The first is his obsession with making salaries public. My guess is that he and his brain trust have decided that people in general don't think what they make is anybodies business. Hence he is playing on these sympathies. The second thing is that he is more concerned with corporate interests than he is with the interests of the citizens of the Commonwealth. All-in-all he has made a very strong case for the need to open things up at Penn State. That of course is a "unintended negative consequences" for him.

Technorati Tags: Penn State, Spanier, Right-To-Know, Pileggi, sunshine, Pennsylvania

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For the Open Record Redux

State Senator Dominic Peleggi (R-Chester/Deleware) has introduced a bill which will amend the state's open records law. Unlike State Rep. Tim Mahoney's (D-Fayette) bill, it does not start with the asssumption that all records held by a government entity are public records and then carve out exceptions, rather Peleggi's bill specificly defines which records are public. This make the bill significantly weaker than Mahoney's bill. The good news is that like Mahoney's bill it does cover state-related universities.

Technorati Tags: Pennsylvania, Penn State, Sen. Peleggi, open records bill

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For the Open Record

Tim Mahoney's (D-Fayette) open records bill can be found here. And for the record, it covers state-related universities. The definition of agency includes,

State-aided colleges and universities, State-owned colleges and universities, State-related universities and community colleges.

The bill is long. Here is the paragraph which defines a public record. Much of the rest of the bill carves out exception to this rule.

"Public record." All documents, papers, letters, maps, books, tapes, photographs, films, sound recordings, data processing software, database, data or other material, regardless of the physical form, characteristics or means of storage or transmission, made or received in connection with or relating to the work of an agency, except those documents exempt or prohibited from disclosure under Federal or State law. The term does not include those items that are clearly personal in

nature and unrelated to the spending of public funds or the duties imposed upon the agency.

That last sentence seems to open up a huge loophole. Could Penn State argue that this or that didn't use any public funds or that something was not part of its duties as a University-oh, let say running a concert hall or a hotel-and therefore not covered by this bill? Any lawyers out there who want to weigh in on this?

Technorati Tags: Penn State, sunshine, Mahoney, open records law

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It's As If He Was Thinking of Graham

The following commentary by Lawrence Krauss, a physics professor at Case Western Reserve University, is from Marketplace on NPR (H/T UD).

My criticisms of governance at Case Western Reserve University helped spark two non-confidence votes and our president's resignation.



Not only did he not raise enough money, but the funds that were raised were often mismanaged, spent on marketing rather than research and scholarship. Ultimately the reputation of a research university depends on the latter.



But don't get me wrong. I know it's tough these days to run a successful university. It takes money.



Just consider this: To raise $5 billion in five years, for instance, a university president has to raise on average $3 million per day, every day of the year. And a free market means university presidents have to lure tuition-paying students to campus.



So, there's a natural tendency to try and run a university like a business, with marketing, branding, the works.



That means university presidents rub elbows more and more with rich corporate donors, alumni and trustees. They travel in donated corporate jets, and they get paid CEO salaries.



The problem is, universities aren't businesses. The ultimate product and measure of success isn't profit, it's the quality of scholarship.



In fact, research and education don't make money, they cost money. The more successful a research program, the more it costs. The financial investments in all this don't yield short-term fiscal rewards, but long-term ones for society as a whole.



University presidents should be spokespeople for education, intellectual leaders whose vision guides colleagues and students alike — and inspires donors to reach into their pockets, but they must balance the last task carefully.



Presidents disconnect from their shareholders — the faculty — at their own peril. But it's easy to see how this can happen when they spend their days away from their colleagues in a corporate jet at 50,000 feet, traveling at half the speed of sound.

I fully endorse these ideas.



Technorati Tags: Spanier, corporate university, Penn State

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The GOP Claims to Like a Tan. But They Might Prefer a Fake One from a Bottle.

Mixed news today on the move to bring sunshine to Old Main. First, the good news. The State Senate GOP leader Dominic Pileggi,of Delaware County,has come out in favor of a new open record law and he wants the law to cover Penn State.

Speaking at a Pennsylvania Press Club luncheon in Harrisburg, Pileggi said Senate Republicans plan to introduce legislation within a month that would make several changes to the Right-to-Know Law.

One major change would be exposing legislative spending, which could reach about $341 million this year, to the state's open-records law.

While the House and Senate have released receipts of spending by individual legislators, the chambers are under no legal obligation to do so. Sometimes they restrict documents from being photocopied or take months to fulfill records requests, and little is available on the Internet.

"I'm going to make what I hope will be a compelling argument that there's nothing to hide there and we should make them available," Pileggi told reporters after the event. "I don't know any reason that they couldn't be available."

[...]

Some of the proposed changes Pileggi expects include reducing government response times to requests for records from 10 days to five days and allowing records requests to be submitted by e-mail.

Pileggi, the former Chester mayor who is in his first weeks as the Senate's majority leader, said he also expects the legislation to cover Pennsylvania's four state-related universities -- which include Penn State -- and make it clear that current law applies to the state's student loan agency.

Now here is the bad news.

Pileggi said, however, that he would not favor broadening the definition of a public record, criticized by open-records advocates as too narrow. They also say it puts the onus on the person requesting the record to show that it should be public, rather than forcing the government to prove that it should not be public.

We must work to make sure that a strong open record law is passed. It would be rather meaningless if Penn State is explicitly covered by a law which doesn't assure access to very much.

We won't know for sure where this is going until bills are actually introduced in the Assembly and Senate. I'll let you know when that happens.

Technorati Tags: Sunshine, Spanier, GOP, Mahoney
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A Closer Look at the Numbers

My last post concerning the way in which the University tried to hide the amount of its debt service in the 2006-2007 University budget very likely was wrong. I couldn't find a line item for debt service in the budget and deduced that an item labeled capitol improvement was in fact debt service. It is possible that the purpose of this cryptically name line item was to give the impression of a much lower debt load than is in fact the case.



Today I found a report, issued in August of 2006, on Virginia Tech's debt policy which uses the debt policy of several universities, including Penn State, to assess its own policy. This report contains informations from Moody's bond rating service which combined with other information allowed me estimate the debt service.



Penn State's total debt, at the time the report was issued, was $849 million. The ratio of debt service to operation costs is 0.027. The total budget for 2006-2007 (Erickson's report to the Penn State Faculty Senate, p. 21 of the pdf file.) is $3.2 billion. If one assumes that that total budget and operating costs are the same (Since the budget is balanced, this is not unreasonable to assume.) then debt service would be $86.4 million and not the paltry $3.65 million which I guessed at yesterday. Total student enrollment for the 2006-2007 academic year, according to the Collegian, is 83,721. Therefore the amount of debt per student is $10,141. The debt service per student is $1032 based on total operating costs. If you exclude Hershey and Penn College the numbers are more than halved, but still substantially more than yesterday's guess. The debt service per student in this case drops to $442. This later number does not leave out the students from Hershey and Penn College in the total number of students. If those students are dropped, then that number would increase. Either way, $1032 or $442, it is a substantial contribution to tuition.

The state also incurs debt on behalf of the University for capitol improvements, which are payed-off with tax dollars. These numbers are not included in the report.

Let me set aside the size of that numbers for a moment and return to the original point of my post yesterday. The University does not make these numbers readily available. I had to spend the better part of today looking for the information which I needed to estimate the debt service per student and I was lucky to find the Virginia Tech report. Without that report I wouldn't have been able to do the calculations.

I believe that the budget information that the University places online is designed to give the appearance of openness while, in fact, obscuring the situation as much as possible. We need more sunshine. The University should be required to put a detailed budget online in an easily searchable format. Work to get the Mahoney open record law passed.

Technorati Tags: tuition, Spanier, debt, sunshine, Mahoney, spin

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Debt Service by Any Other Name

I was perusing the University budget to try to answer the questions in my last post about the $170 million that the University recently borrowed. I didn't find answers to those questions, but I did find, rather oddly, that there is no line item for debt service in the budget. You can find one for Penn College which is a self contained subsidiary of the University, but not one for the University itself. However, there is this rather confusing bit.

Insufficient or inadequate space continues to be a serious impediment to Penn State's academic programs. The University lags behind its peers in providing modern laboratory and classroom space for its students, faculty, and staff. Even with the new facilities constructed over the last several years, Penn State still has among the lowest overall space per full-time-equivalent (FTE) student of any public university in the Big 10. While capital funds received from the Commonwealth are greatly appreciated, they will not be sufficient to meet the University's most critical needs. As a result, the University established an ongoing general funds budget to support the capital improvement program. These funds enable the University to incur debt for building renovations and construction, and to provide for the operating costs of the buildings once they are completed. A total of $3,650,000 is included in the budget for 2006-07.

It sounds to me like the $3.65 million in the 2006-2007 budget is for paying back borrowed money. The fact that it is buried at the end of rather defensively written paragraph certainly suggests that the "capitol improvement" line item is debt service renamed.

Can anyone doubt that these guys are full of shit. We need Tim Mahoney's new open records law and fast!

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Mahon Praises Spanier's Tan While Reaching for More Sunscreen.

This is an update of my previous post concerning Democratic State Representative Tim Mahoney's proposed open record law. The Collegian picked the story up this morning and moves the ball forward with interviews of Representative Mahoney, Penn State flack Bill Mahon, and State Representative Kerry Benninghoff. I think the article deserves some analysis.

I said in my earlier post Spanier will oppose the language in the bill which explicitly expands coverage of the open record law to Penn State, but Mahon didn't come out against the bill or the proposed language.

Bill Mahon, Penn State spokesman, said he has no problems with the proposed legislation.

"There are a number of newspapers over the years who have demanded Penn State make budget information available. This usually comes from newspapers who haven't checked our Web site," he said. "You can literally find hundreds and hundreds of pages of budget information."

Note the hostile tone. According to Mahon newspapers didn't request or ask for budget information, they "demanded budget information". His next statement is designed to give the impression that Penn State already makes the requested information available, therefore the papers were somehow being unreasonable. But the online budget is not a line item budget. So if you want to know how much Penn State spends on feeding Trustees at their bi-monthly meetings you won't find it on Penn State's Web site or anywhere else. (To learn more about Penn State's use of suncreen, I highly recommend a series of entertaining and informative columns written by Collegian columnist Renée Petrina back in 2004. You can find them here, here, here,here and here.)

Mahoney isn't buying Penn State's talking point, he said "that under his bill, institutions would have to further break down the budget information they currently make available to account for spending within certain categories."

Before anyone concludes from Mahon's remarks that I was wrong about Spanier opposing the language in the bill which would explicitly extend the open record law to Penn State, remember that we are early in the game. Mahon's position as expressed in today's Collegian is Penn State's opening gambit. There is no need for them to oppose a bill which has not even been introduced on the floor of the house. To do so would give the impression that they have something to hide, which, in turn, would would give further impetus for the language. While they take a "what me worry" public position on the bill, you can be sure they are working behind the scenes to kill the bill before it comes to the floor. Their go-to-guy on this is Kerry Benninghoff who has reassuring words for them.

State Rep. Kerry Benninghoff, R-Bellefonte, said, in general, he supports open records, but Mahoney's bill has a long way to go before it can be passed.

"It needs to be narrowed," Benninghoff said. "If it's too broadly written, it will die under its own weight. Then, there will probably be several public hearings at which time I believe the universities will have a word on it. It could include stuff the university doesn't want out there."

"It needs to be narrowed," should be read don't worry Graham I've got your back. Benninghoff is carrying water for Spanier, who will remain above the fray and keep what is left of his pristine image as a good guy. Oh and by the way, bills don't die of their own weight. Bills are killed by legislators. I am looking at you Kerry.

For those of you who despair that Penn State will succeed in squashing this bill before it has a chance to see the light of day, there is some good news today as well. According to the CDT Ed Rendell plans for his upcoming term includes a surprise.

[Rendell] broke new ground with his promise to overhaul the state's open-records law, which many right-to-know advocates regard as archaic because it limits public access to specific categories of records rather than opening all records to public scrutiny except for specific ones.

The fight is on to bring sunshine to Old Main. Contact your State Representative and Governor Rendell in support of Mahoney's bill and be sure to tell him/her that Penn State and other state-related universities must be covered by the bill.

Technorati Tags: Penn State, Sunshine, Mahoney, Spanier, spin
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